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Monday, November 9, 2015

Ohio Supreme Court Issues Ruling on Important Dormant Minerals Act Case

From Vorys:
On November 5, 2015, the Supreme Court of Ohio answered two questions concerning the Ohio Dormant Mineral Act (DMA). In Chesapeake Exploration, L.L.C. v. Buell, the Court held that under the DMA: (1) a recorded oil and gas lease is a title transaction that serves as a savings event that prevents minerals from being abandoned to a surface owner; but (2) that the unrecorded expiration of an oil and gas lease is not a savings event. 
BACKGROUND 
The petitioners are owners and lessees of severed minerals located in Harrison County, Ohio. The minerals were the subject of an oil and gas lease executed in 1984. In 1989, the lease expired pursuant to its terms. No release was filed of record to memorialize the lease’s expiration. The respondents, the surface owners, claimed that the minerals were abandoned under the DMA. The petitioners disagreed, contending that the 1984 lease and its expiration in 1989 were “title transactions” that qualified as savings events, thereby preserving the minerals against abandonment. 
Finding that no controlling precedent existed in Ohio on these issues, the U.S. District Court for the Southern District of Ohio certified two questions to the Supreme Court of Ohio:
  1. Is the recorded lease of a severed subsurface mineral estate a title transaction under the DMA?
  1. Is the expiration of a recorded lease and the reversion of rights granted under that lease a title transaction that restarts the twenty-year forfeiture clock under the DMA at the time of the reversion?
You can read more about this decision and its implications by clicking here. 

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